Israel’s technology sector had a banner year in 2019, raising $8.3 billion in 522 deals, a 30 percent growth over 2018, ZAG law firm announced Tuesday (Jan. 8).
“2019 marked a record year, capping a decade of successive increases in capital invested in the Israeli high-tech industry,” said Shmulik Zysman, ZAG founding partner. “This growth is partly due to the growing foreign capital invested in the Israeli high-tech industry.”
High-tech companies raised $39.1 billion from 2010-19. In the fourth quarter, tech firms notched $2.3 billion, the highest since 2012. Mega rounds of $50 million or more peaked in 2019 with 41 deals capturing 50 percent of the capital, according to the report by ZAG and Israel Venture Capital (IVC).
“The number of deals with VC [venture capital] participation captured 60 percent of the total number of deals in 2019,” Zysman said. “The dollar volume of deals in which VCs took part captured 77 percent of the total raised in 2019.”
Capital was raised in a variety of technology fields — software, life sciences, semiconductors — although interest is highest in startups specializing in artificial intelligence (AI). AI-based firms raised $3.7 billion in 199 deals in 2019.
Early-stage funding declined in 2019, however, with seed rounds shrinking to $148 million from $169 million in 2018. This trend is expected to persist, but AI and cybersecurity firms will continue to be hot fields for investors. There were also several initial public offerings (IPO) in 2019 with more expected in 2020, the report said.
“More Israeli companies in the growth stage aim to become their market’s leader,” IVC CEO Guy Holtzman said. “The continual increase in the amounts invested in mature start-ups is due to new investors, such as Israeli and foreign Private Equity funds. Furthermore, IVC noticed a decline in the number of newly established companies. We believe that both trends will continue in 2020.”
Israel is hoping to get more tech company listings on its stock exchange, Tel Aviv Stock Exchange (TASE), the main exchange in the country.
TASE has not traditionally been known for listings from high-tech companies. Many tech startups instead choose to list on Nasdaq or other exchanges or end up finding private financing before being bought by multinational corporations.